Canada Markets

U.S Wheat Growers Eye the Cuban Market

Canada's exports of grain to Cuba includes 145,000 metric tons of wheat and 12,300 mt of durum between August and January this crop year, while combined exports have averaged 220,000 mt over the past five years, reaching a high of 301,737 mt in 2012/13. (DTN graphic by Nick Scalise)

With the most recent USDA World Agricultural Supply and Demand Estimates report estimating United States 2015/16 all-wheat exports at 775 million bushels (21 million metric tons), down 9.3% from the previous year and the lowest since 1972/73, there should be little surprise that every rock is being turned over in search of opportunity.

One of these markets on the U.S. industry radar is Cuba, with a recent U.S. Wheat Associates report viewing Cuba as a "large market still out of reach" despite the close proximity of the country to U.S. shores. The report indicates annual demand averaging over 30 million bushels annually (816,460 mt), while the U.S. has not sold to Cuba since 2011.

It is viewed as technically legal for the U.S. to ship to Cuba, although there are a number of regulatory issues which make this trade unfeasible. These range from the inability to offer credit, an uncompetitive pre-payment requirement, increased banking charges, a six-month ban on vessels entering the U.S. after docking in Cuba leading to increased shipping costs along with tensions between buyers and sellers as a result of the embargo.

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On Tuesday, U.S. Secretary of Agriculture Tom Vilsack reported that steps are being taken to prepare for the day when the 50-year-old trade embargo is lifted and trade is allowed to normalize. One request is for funding for people to study the domestic market in Cuba while building badly needed relationships, with the ultimate goal of one day meeting 50% of Cuba's food and agricultural product imports, from the less than 15% currently enjoyed.

The Canadian government's Embassy of Canada to Cuba website indicates that Canada-Cuba diplomatic relations began in 1945, while Canada and Mexico were the only two countries which did not break ties after Cuba's revolution in 1959. Ties between the two countries range from government, business, nongovernment organizations and society as a whole, with one example noted is the Terry Fox Run in Cuba being the largest in the world outside of Canada.

The U.S. Wheat Associates note Canada and the European Union as the current suppliers of wheat to Cuba. The attached chart shows the August-though-January exports of wheat and durum for 2015/16 as compared to the previous 10 years. In the first six months of this crop year, Canada has exported 145,000 mt of wheat and 12,300 mt of durum, while the total volume of combined wheat was 204,000 mt in 2014/15, 201,000 mt in 2013/14 and 301,737 mt in 2012/13, as indicated in Statistics Canada data.

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Cliff Jamieson

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